I entered into a non-disclosue confidentiality agreement to purchse a exsisting franchise.

Without reviewing the agreement you signed, it is difficult to ascertain what will happen. However, if you signed a document which acknowledged that you are receiving trade secrets, etc., you may be sued under the agreement. In other words, you better see a lawyer prior to opening the competing business.

Your question is whether you are in violation of a non-compete/non-disclosure agreement when you looked at confidential financials for a business you sought to purchase and instead opened (or began working for) a competing business right next door. The obvious answer is 'yes' if the terms of the non-compete/non-disclosure say what you imply it says. But of course details are crucial when faced with situations such as this; without reviewing that document and parsing relevant law in Illinois, there is no way to obtain a reliable answer. To get anything like a solid answer to this question you should sit down with a practitioner in your area and spell out the whole story behind this NC/ND agreement and your subsequent decision to open or work for a competing business. I hope this information has been helpful. Feel free to contact us with any questions or follow up.

I agree with my colleagues, you should review the terms of the agreement with a business lawyer to determine your rights and how to better insulate yourself from a claim. However, you should be aware there is a difference between a non-disclosure/confidentiality agreement and an agreement not-to-compete. The typical non-disclosure agreement restricts a party from disclosing the "confidential information" to other parties, and it may also contain a clause that prohibits the use of the confidential information for the benefit of the recipient. However, this is not the same a non-competition clause. A typical non-competion clause is fairly straight-forward and written in clear and direct language so it can easily be understood by the parties. Since you did not cite a provision that states you may not compete, I suspect the non-disclosure does not have one. This post is intended for informational purposes only. It is not intended to provide legal advice and does not replace the services of a business lawyer who can assess your situation and provide advice tailored to your particular circumstances.

The non-disclosure agreement prevents you from disclosing the P/L information to others; it does not necessarily prevent you from going into a competing business - unless there is a non-compete clause in the agreement you signed. Even then, to be enforceable, non-competes must be reasonable in time and scope. Your best course of action is to show the agreement(s) you signed to a franchise attorney. Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise